ASML and Cymer to tackle EUV together

Extreme Ultraviolet (EUV) semiconductor lithography is seen as one of the necessary advances for smaller geometries, and yet there have been many doubters as progress has been slower than hoped for in getting these into the mainstream market. ASML a provider of lithography systems for the semiconductor industry, and Cymer, a supplier of lithography light sources used by chipmakers to manufacture advanced semiconductor devices, have been closely collaborating for over a year and now they have announced that they have entered into a definitive agreement under which ASML will acquire all outstanding shares of Cymer in a cash-and-stock transaction currently valued at EUR 1.95 billion.

Combining Cymer’s expertise in EUV light sources with ASML’s expertise in lithography systems design and integration should reduce the risk and accelerate the introduction of this extremely complex technology.

The transaction, which was unanimously approved by the boards of directors of ASML and Cymer, would entitle each Cymer shareholder to receive US$20.00 in cash and a fixed ratio of 1.1502 ASML ordinary shares per Cymer share. The total price reflects a premium of 61 percent over Cymer's 30-day volume-weighted average price (VWAP) and 52 percent over its 90-day VWAP, using ASML’s VWAP for the comparable period ending 16 October 2012.

The transaction is expected to close in the first half of 2013 and is subject to customary closing conditions, including review by U.S. and international regulators and approval by Cymer's shareholders. Excluding non-cash purchase price accounting adjustments, the transaction is expected to be accretive to ASML's EPS in the second year after closing.

EUV status updateASML’s 6 pre-production NXE:3100 EUV systems, capable of resolution performance compatible with the 22 nm node in single patterning mode, have exposed more than 23,000 wafers at customer sites with good overlay and imaging performance, enabling semiconductor device recipe development and confirmation of infrastructure progress. The successor system, the NXE:3300B, is capable of resolution performance compatible with the 14 nm node in single patterning mode. This system has already shown overlay down to 1.3 nm and imaging down to 16 nm in a full-field single exposure using new illumination technology. Progress continues on improving the productivity of the EUV systems currently limited by the light source.

Cymer’s EUV light sources have for some time been exposing wafers at up to 11 Watts source power at customer facilities, resulting in NXE:3100 productivity of up to 7 wafers per hour. ASML and Cymer jointly made significant progress during the summer and have now proven in laboratories a sustained 30-Watt source exposure power potential, which would enable the NXE:3300B to expose 18 wafers per hour. ASML’s specified target remains at 105 Watts or 69 wafers per hour (wph), to be achieved for 2014 microchip production.

The current accumulated EUV exposure experience at customers, the successful demonstration of the NXE:3300B imaging and overlay and the proof of concept of up to 30 Watts source power are expected to support the following plan:

The deliveries of the first 11 NXE:3300B systems in 2013 to be installed at customers for R&D.

Additional orders for NXE:3300B systems intended for production in 2014 at a minimum specification targeting 69 wph. ASML has currently received 4 commitments and expects another 4 to 8 within the next 6 months

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Gigaphoton is also a DUV laser supplier, so it is possibly doubly screwed by ASML this way. it is too tempting to put Cymer lasers in all its tools. I don't know if any customer would insist on Gigaphoton.
But this is still a desperation move by ASML related to EUV. However, it does offer some strategic supply chain benefits for its current DUV market. Still, the cost of 2.5-2.6 billion USD is significant.